The German FDP party’s rolling billboard was driven around London last week.
Photograph: Matt Dunham/AP

When a white truck with a colourful placard reading “Dear startups, keep calm and move to Berlin” spent 12 hours driving around the streets of Westminster and Shoreditch on Monday, it sent ripples of laughter rather than fear around London’s silicon roundabout. Paid for by Germany’s FDP party, it looked more like a marketing stunt to raise the profile of an ailing political group than anything to do with Berlin’s digital economy.

But the van is only one of several measures aimed at luring startups from London to the German capital. As the Observer has learned, Berlin’s senate has written to hundreds of business headquartered in London over the course of the past week to persuade them to switch their operations overseas, as well as making plans for a bureau in the UK capital designed to poach business from the local startup community, expected to open in September.

The Berlin senate is also warning London-based venture capital funds that unless they relocate their headquarters, they stand to lose out on money from the European Investment Fund (EIF) once Britain formally leaves the EU. Last year, the UK benefited to the tune of €655.8m (£559m) from EIF coffers.

“We want to make sure that British startups and international talent feel welcome here,” says Cornelia Yzer, Berlin’s senator for the economy, technology and development. “Brits already love Berlin – we see that from the number of people who travel here every weekend. We will continue to receive them with open arms.”

With Berlin’s startup scene already having overtaken London’s in terms of venture capital investment in 2014, policymakers in the German capital feel emboldened. They argue that their city offers a pool of talented international developers who may avoid Britain once curbs on migration are applied, commercial rents that are about a third of those in London, and – not unimportant for a young, creative industry – a better party scene.

With Germany having a strong network of large manufacturers, as well as research bodies such as the Fraunhofer and Max Planck institutes, Berlin already has an edge over London when it comes to startups that specialise in business-to-business services. And while London remains Europe’s capital of “fintech” – or financial services technology – many companies will be nervously watching to see whether the UK can retain its “passporting” privileges, which allow a bank to operate in all European countries so long as it has a licence from an EU member state.

Some financial startups such as Chicken Financial, a small specialist lender, have already accelerated their expansion to the German capital after the Brexit vote.

“For us, it’s a risk diversification strategy,” says co-founder Samuel Ely. “We expect there will be a long-term shift of fintech and banking from Frankfurt to Berlin and that Berlin could eventually become continental Europe’s new financial capital.”

Reservations about whether Berlin can provide a more fruitful ecosystem for Europe’s digital economy than London still remain, however – even inside the German capital.

Many young entrepreneurs in the city complain that while it is relatively easy to start a company in Germany, shutting down a business can take a long time. Unlike in Britain, a company’s books have to be kept open for three to five years after it has been removed from the trade register to make sure taxes and personal liabilities are fully cleared – a measure that some companies circumvent by relocating to other EU countries, like Spain, and shutting it down there instead.

Travis Todd, founder of Silicon Allee, a website for Berlin’s startup community, says he has three dormant companies he has been trying to shut down for years. “It’s a major headache, and it makes people more reluctant to start their next company.”

Many startups complain that Berlin’s local tax offices don’t differentiate between small businesses and large corporations. Yzer says the city is in discussions about setting up a special startup unit across finance ministries that would smoothen the process for the digital economy.

While the German capital has Berlin Partner – a widely praised agency that helps newly arrived international businesses navigate the quirks of local bureaucracy, and assists with anything from visa applications to flat-hunting – other bodies such as Germany’s chamber of commerce still communicate exclusively in German.

“Berlin is a brilliant ecosystem for startups, but I am not sure it’s the result of policy. We tend to tell new arrivals: don’t wait for help from the government, just do your own thing,” says Todd.

In London, Berlin’s overtures have not yet caused a panic. Harry Briggs, a partner at venture capital company BGF Ventures, says that Berlin remains an “also-ran” as a startup hub compared with London, while Rob Moffat, a partner at investment firm Balderton Capital, says he doesn’t expect many larger companies to relocate any time soon.

“Most people have other halves and there is not much work in Berlin for them unless they are in startups or government,” he says.

“I do expect more young single British founders to start their company in Berlin, for the low cost of living and easy access to the rest of Europe. But I don’t expect an exodus.”

Gerard Grech, chief executive of Tech City UK, the body set up by the UK government to foster east London’s tech scene, says he is “listening to the community and will be informing government on the policies that need to be put into action.

“To startups that may consider relocating, the message is simple – nothing has changed”, Grech says. “We are confident that further initiatives and policies will continue to evolve to ensure London stays a global tech powerhouse.”